The Government plans to scrap the default retirement age from October next year.
It is consulting on the change, which would see firms no longer able to dismiss staff at age 65.
Employers can currently force an employee to retire at 65. Their only obligation is to hold a meeting with the staff member to discuss plans at least six months before their 65th birthday. The decision to terminate employment is then solely at the employer’s discretion.
Proposals to change the retirement law formed part of the Government’s coalition agreement and were included in both parties’ manifestos but this is the first time a deadline had been set.
Many welcome the move but the Forum of Private Business says the plans would impede the ability of thousands of small firms to plan for the future and open the door to costly employment tribunals. Under the proposed rules, an employer’s only means of dismissing older workers would be based on declining competence.
Spokesman Chris Gorman says: “Most employees are competent enough to work beyond the age of 65 without a significant deterioration in their abilities. However, for those not willing to leave voluntarily, there will come a time when the needs of the business have to be considered.
“The only viable option will be a capability dismissal based on the declining competence of the worker. We believe this would be an undignified and humiliating end to a career for most staff.”
Legal & General welcomes the change. Managing director of workplace savings Tony Filbin says: “We believe it makes sense for the Government to allow people the flexibility to decide when to stop working and to bring retirement legislation in line with pension legislation.”